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15 Best Stocks to Buy and Hold for 3 Years
Fahad Saleem
14 min read

In This Article:

In this article, we will take a look at the 15 best stocks to buy and hold for 3 years. To see more such companies, go directly to 5 Best Stocks to Buy and Hold for 3 Years.

With out of control inflation, falling banks, uncertain geopolitical situation and layoffs all around you, it’s hard to stay focused on your long-term investing goals. But if we look at the history, there’s almost always a crisis looming large in financial markets. Investing in quality stocks and staying invested for the long term differentiates successful investors from average investors.

How Long is a Long-Term Investment?

Stocks outperform government bonds, but only when held for the long term. Several studies show that if you invest in stocks and cash out during volatility or downturns, you miss out on the potential gains that come during bull runs. According to an excellent paper titled “How Long is a Long-Term Investment” authored by Pu Shen of Federal Reserve Bank of Kansas City - Economic Research Department, from 1926 to 2002, the total compound annual rate of return of an index of all U.S. stocks, including dividends, was about 9.7%. On the other hand, long-term government bonds average only about 5.5%.

The paper says that the average business cycle in the US is 8 years. If you stay invested in stocks for say one or two decades, the short-term risks become irrelevant since short-term price movements of stocks offset each other over long business cycles. That’s why the risks associated with stocks decline faster when the average holding period increases. This is the power of long-term investing and that’s what makes people like Warren Buffett successful in a highly-volatile stock market.

In an interview with Bloomberg, Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky, explained the important of maintaining a long-term approach in these words:

We’re telling clients to think long-term and stick to their plan. We expect more volatility in the near-term, including the possibility of retesting the October lows early in the year, but we think the setup for long-term investors is starting to look attractive. Valuations have mostly reset, and fixed-income yields are still hovering around decade highs. More tactically, we think near-term caution and defensive positioning makes sense. We’d favor adding to quality in both fixed income and equities and using rallies to reduce exposure to more speculative assets as we head into an economic slowdown or recession.

Methodology

In March, Morgan Stanley shared a list of 30 stocks it believes are suitable buys for 2025. The firm said it “sought to identify the best franchises, not the most undervalued stocks.” The firm mentioned that it was largely “agnostic” about these stocks’ valuations and its guiding principle in choosing these stocks was to create a list of companies “whose business models and market positions would be increasingly differentiated into 2025."

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